By Cento Veljanovski (Case Associates)
Friedrich A. von Hayek’s (1899-1992) view of competition as a discovery process is well known but little used. His central thesis is that a competitive pricing system is the most effective way to coordinate economic activity and economise on the information held by market participants in a world of generalised ignorance and change. But do the tremendous advances in computing and data management undermine Hayek’s claim that the market is superior? Does his focus on prices make his view of competition less relevant to the digital economy? Even Hayek had doubts. Unlike most ‘Austrian economists’ Hayek saw a need for antitrust to deal with the exclusionary abuses of ‘non-privileged monopolies’ and restraints of trade. Yet the conceptual basis for this is vague and it jars with Hayek’s view of liberal market law as spontaneously created. Here I critically assess Hayek’s views on competition, monopoly and antitrust, and their relevance to the ‘digital economy’.